Global oil prices recorded a sharp decline on Wednesday after US President Donald Trump announced that Venezuela would supply between 30 and 50 million barrels of sanctioned oil to the United States.
The statement raised concerns about increased supply in the global market, pushing prices lower.
Following the announcement, US West Texas Intermediate (WTI) crude fell by 78 cents, or 1.37 per cent, to $56.35 per barrel, while Brent crude futures declined by 61 cents, or one per cent, trading at $60.09 per barrel.
In a statement shared on social media on Tuesday, President Trump said the oil would be sold at market prices, adding that the proceeds would remain under his control as president and would be used for the benefit of the people of both Venezuela and the United States.
Market analysts say the remarks clearly signal an increase in global oil supply, intensifying fears of oversupply. Tina Teng, market strategist at Moomoo NZ, said President Trump’s approach appears focused on expanding oil supply rather than restricting it.
Analysts further noted that the proposed arrangement could initially involve diverting Venezuelan oil cargoes currently destined for China towards the United States. Venezuelan Merey crude is currently trading at around $22 per barrel below Brent, placing the overall value of the potential deal at approximately $1.9 billion.
Possible impact on Pakistan
Experts believe the decline in global oil prices could have implications for Pakistan, which relies heavily on imported oil to meet its energy needs. If the downward trend continues, there may be room for a reduction in domestic petroleum prices in the coming days.
Public focus on the Shehbaz government
Economists and public commentators argue that if global oil prices fall further, the Shehbaz Sharif government should pass on the benefit directly to consumers to ease inflationary pressures. However, any final decision will depend on the upcoming petroleum price review and government policy.
